Paper Excellence Expansion Shows Threats to Canada’s Forests

Domtar’s stockholders have approved the company’s acquisition by Paper Excellence: a move which would make Paper Excellence far-and-away the largest pulp producer in Canada, and further jeopardize Canada’s reputation as a source for sustainable wood. Paper Excellence is closely affiliated with Sinar Mas Group’s Asia Pulp and Paper: a corporation internationally notorious for its role in deforestation and human rights abuses. Canada is letting corporate behemoths log and pulverize forests critical to communities, species, and the global climate. Solutions are possible, but Canada needs to start being part of the solution rather than part of the problem.

The acquisition will expand Paper Excellence's operations in Canada's boreal forest (photo by River Jordan for NRDC)

The summer of 2021 has already brought a terrifying wave of climate change-driven extreme weather, demonstrating the importance of phasing out fossil fuels and protecting the world’s carbon stores. Yet governments and corporations are doing very little to protect the world’s last intact forests—which contain some of the world’s most important carbon stores—turning much of them into single-use products and exacerbating the climate crisis. Canada is a key driver of this trend: it’s the second largest wood pulp exporter in the world, with the third highest rates of intact forest landscape loss. And as this week has shown, it’s also a hotspot for expanding logging operations by powerful multinational corporations with troubling track records. 

The stockholders of Domtar, a U.S. company that is one of the largest pulp producers in the world, today voted to approve the North American company’s acquisition by pulp and paper giant Paper Excellence. Once regulatory hurdles are cleared, this expansion will further cement Paper Excellence as the largest pulp producer in Canada, and will significantly expand its operations in Canada’s boreal forest

This purchase will also bring Domtar into the notorious family empire of Paper Excellence and Sinar Mas Group’s Asia Pulp and Paper (APP). For years, environmental and human rights organizations have highlighted APP’s role in deforestation and human rights abuses around the world (as detailed in this NRDC blog). Additionally, journalists have reported that Paper Excellence has a troubled history in Canada, including polluting in areas critical to Indigenous communities, and rapidly expanding while claiming insolvency over debt owed by its subsidiary to its own parent company. Concerns about Domtar becoming part of this corporate empire led 68 organizations to write Domtar’s key stakeholders last month, urging them to oppose the acquisition. 

The groups also stressed that this move would reportedly make Domtar privately held, and part of a secretive corporate structure with no accountability to shareholders. This is a timely concern, as shareholders are increasingly using their influence to urge corporations to improve their forest sourcing commitments.

Paper Excellence’s expansion is particularly concerning given the lack of meaningful safeguards overseeing Canada’s logging industry. Canada’s federal and provincial governments have created a regulatory vacuum which allows industrial logging to run rampant, conceals its impacts, and stymies efforts to make it more sustainable. As a few examples from the last year: the Government of Canada rebuffed its own Environmental Minister’s call to safeguard the habitat of endangered southern mountain caribou from industrial development. Canada is hiding the ball on the carbon impacts of industrial logging, undermining global efforts to tackle the climate crisis. Canada has even undermined U.S. state efforts to ensure that wood sourcing has not come from intact forests, and from areas where companies have failed to obtain Indigenous Peoples’ Free, Prior and Informed Consent. As for provinces including Ontario, Quebec, and British Columbia, they have incentivized the clearcutting of intact and old-growth forests despite public outcry and the wishes of Indigenous Peoples, and have rolled back even inadequate existing protections in order to allow the expansion of industrial logging.

The story of Paper Excellence acquiring Domtar is worrying, in that the pool of companies profiting from industrial logging is shrinking, and actors with notorious reputations are increasing their influence. It’s also a reminder that, without strong and permanent protections for Canada’s intact forests, the management of these forests will be vulnerable to any future merger and acquisitions and the whims of corporate leadership. Rather than turning a blind eye to corporations with problematic histories whose operations span from Canada to Indonesia, Canada could be be part of the solution. Stronger policies could benefit communities and the global climate by respecting the wishes of Indigenous Peoples, requiring logging to be more sustainable, reporting logging’s climate emissions, and disincentivizing the turning of much of these forests into throwaway products. Yet at the moment, the government is just acting as an industry enabler, jeopardizing its efforts to advance natural climate solutions and further undermining its reputation in the global marketplace.

About the Authors

Courtenay Lewis

Manager of Ecosystems Policy, Canada Project, International Program

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